Cut the paneer in big flat square pieces as u cut for paneer tikka same way cut 2 capsicum 2 onions and 1 tomato ( keep rest of onion and tomatoes for gravy)
In a flat skillet add some oil and roast the paneer onions bell peppers and tomatoes with a seasoning of salt be careful not to break the paneer and roast as evenly as possible but do not over cook it
In a wok add oil and add onion slices and fry till golden brown then add garlic ginger and sesame seeds khus khus and cashew nuts fry all this for just 30 seconds and let it cool transfer all this to a grinder
Now in the same grinder add 3 tomatoes 1 carrot ( helps to get that red colour without any artificial colours) salt chilli powder turmeric coriander powder garam masala grind it to a fine paste u will get a orange paste
In the same wok add oil then butter let it melt add sugar and bay leaves fry for a minute and then add the paste and cream and fry this paste nicely till the oil separates it will take about 5 mins
As the oil separates and roasted paneer onions and bell peppers pieces ( not tomato pieces) mix nicely but carefully fry for a min and add milk or water to make a nice gravy boil it for about 2 mins then add roasted tomato pieces and off the gas do not cook the gravy after adding tomatoes as they will turn mushy and spoil the dish
This dish can also be made with left over paneer tikka but as paneer tikka is spicy use less spices in the gravy